Debt & Frugality

As Didi says in the novel (Findependence Day), “There’s no point climbing the Tower of Wealth when you’re still mired in the basement of debt.” If you owe credit-card debt still charging an usurous 20% per annum, forget about building wealth: focus on eliminating that debt. And once done, focus on paying off your mortgage. As Theo says in the novel, “The foundation of financial independence is a paid-for house.”

How to Survive on $100 a Month of Groceries

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Below we’re pleased to publish the second piece here at the Hub from Sean Cooper, a millennial who really “gets it” when it comes to financial independence. His first contribution was on how he plans to become Findependent, or at least debt and mortgage free, by age 31. The key to this is what the book, Findependence Day, calls “guerrilla frugality.” If the term is new to you, see this primer on the term (as well as “frooger”), which is right below Sean’s article here in the Debt & Frugality section of the Hub.

Sean’s piece is a classic example of guerrilla frugality. Because we all have to eat!

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Sean Cooper

Over to the maestro of frugality!:

By Sean Cooper

Special to the Financial Independence Hub

Do you find it challenging to keep your grocery spending on budget? You’re not alone. For most of us, groceries are the second-highest expense after putting a roof over our heads. With temptation down every aisle, it’s easy to let grocery spending spiral out of control.

I’m living proof you can spend less and still enjoy your favourite foods for under $100 a month. I’m able to use the extra money I save towards goals like paying down my mortgage. I know not everyone can live on $100 a month worth of groceries, but maybe my strategies can help reduce your grocery spending a little bit. I’ve found the secret comes down to making wise spending choices.

How I Spend Only $100 a Month on Groceries

Spending $100 a month on groceries is about making specific choices. Instead of going shopping every day, I make a shopping list and go only once a week. Not only does this save time, it helps me avoid impulse purchases. I’ll bring the flyers of other grocers so I can price-match. In a typical shopping week I usually buy only the basics: fruits, vegetables, bread and milk. For under $15 I can get everything I need for the coming week. I’ll only splurge and spend more if I’m running low on something and it’s on sale. For example, if spaghetti sauce is on sale for half price I’ll buy 20 jars — enough to last me until the next sale. As for protein, I stock up on peanut butter and almonds when they’re on sale and never pay full price. I also like to cook for every meal, including breakfast. Instead of buying expensive breakfast cereal, I cook oatmeal. It’s a lot less expensive and more nutritious.

I want to tell you the tale of what I did. I’m not expecting you to become vegetarian, but consider taking a look at some of the changes you can make in your own life.

Evaluate Your Budget

How would you like to buy your everyday grocery items for a lot less? Have you ever considered shopping at discount supermarkets? That’s what I do. The savings can really add up. Shaving $20 off your grocery bill each week will add up to yearly savings of over $1,000. I find discounts grocers often have produce and meat that is just as good in terms of quality as the so-called premium stores. I’m not telling you to stop shopping at your local grocer, but by re-evaluating your budget you can find new ways to save.

Make a Shopping List

To avoid overspending, consider making a shopping list and browsing the flyers for deals on products you’re already planning to buy. I save even more money by price-matching, Many discount grocers match the price of rival stores simply by showing a competitor’s weekly flyer. I show a flyer of the rival grocery store to the cashier and I’m given the lower price. You don’t have to price-match, but just by making a list you’re less likely to overspend.

Consider Cutting Back on Meat

Steaks on barbecueNo, that’s not your steak being grilled, it’s your wallet. Sizzling meat prices can really take a bite out of your grocery budget. I’m a vegetarian; instead of eating meat, I get my daily dose of protein from foods like nuts and dairy products. I’m not saying you have to give up strip loin steaks and pork chops, but you might choose to eat meat less often, or buy cuts that are on sale.

Try to Limit Fast Food

I know it can be tempting to pick up fast food on the way home after a long day at the office. We’re all guilty of doing this once in a while. But if you can limit dining out to only once a week, the savings can really add up. By cooking at home instead, you’ll save money and eat healthier, too. Have you ever considered cooking your meals in batches? That’s what I do. I’m not saving you have to give up takeout food, but by eating at home more often you can save a lot.

Consider Buying Items on Sale

If you’re willing to stock up on grocery items you buy every week when they’re on sale, it can add up to big savings. When you see your favourite non-perishable items like canned vegetables and coffee on sale, consider stocking up. By buying enough to tide you over until the next sale you can avoid paying full price. (For some perishables, like meat, and frozen dinners or desserts,  a freezer can come in handy if you stock up when the items are on sale: JC.)

Buy in Season

Buying your favourite fruits and vegetables out of season can cost you a bundle. Have you ever seen the price of cherries in January? Yikes! Consider substituting your favourite fruits and vegetables for produce that’s in season. For example, instead of buying watermelons during the winter, I purchase less costly fruits like apples and oranges. If you’re not ready to give up your favourite fruit, you can still save money buying it less frequently – perhaps only once a month instead of every week.

You don’t have to follow my example to the letter, but if you’re willing to make small changes, they can have a big impact on your monthly budget.

Sean Cooper is a Personal Finance Expert and Financial Journalist. He is a first-time homebuyer and landlord who aspires to reach findependence by age 31. Follow him on Twitter @SeanCooperWrite and read his blogs and request his writing services on his website: http://www.seancooperwriter.com/

 

Guerrilla Frugality & Froogers

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LunchEarlier this fall, I gave a short interview to robo-adviser/light advice firm NestWealth.com about financial independence, ETFs and the term I often use in Findependence Day: guerrilla frugality. You can find it here.

I first used the term “guerrilla frugality” in a personal finance column in the Financial Post. The idea was that early retirement (or findependence) requires a sort of super-frugality.

Guerrilla warfare and guerrilla marketing are both phrases already in the public lexicon. I reasoned that as consumers, we’re constantly besieged by the “guerrilla marketing” efforts of well-heeled advertisers and stealth marketers. So in order to spend less than you earn consistently, in order to save and invest the difference, you need to become super-frugal and practice “guerrilla frugality.”  (Note, it’s not “gorilla,” which some readers have mistakenly used in their correspondence with me. Gorilla is the ape!)

In the book, we talk (in war terms) of donning the battle fatigues of the “Frugality Guerrilla,” which we shortened to “Frooger.”

I’ve used the photo of a brown-bag lunch to illustrate this blog, since the character in the novel starts to brown bag it once he decides he wants to be “findependent” by age 50. In his guest post here at the Hub last week, millennial Sean Cooper also describes how he “brown bagged” it (among many other frugal endeavours) to accelerate his mortgage pay down campaign.

Formal definitions in the Glossary of the new ebooks

In the glossary to two new e-books published earlier this month, we offer these two definitions:

Guerrilla Frugality: A term invented by the author to describe the “warlike” mentality of being super-frugal in order to resist the strong consumption messages of America’s markets and advertisers.

Frooger (Frugality Guerrilla): An invented term in this book describing anyone highly committed to being frugal and saving money.

US fee-only financial planner Sheryl Garrett used the term “frooger” in both her foreword to the US edition of Findependence Day, published in 2013, as well as the new US ebook. Because it appears near the front, you can read Sheryl’s foreword free by clicking on the “Look Inside” feature on either the full book or the abbreviated e-book edition.

10 tips to simplify your way to Financial Independence

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life is simple but we insist on makingit complicatedIn many ways, financial independence is intimately linked with the related themes of voluntary simplicity, inconspicuous consumption and what we call (in the books and e-books) guerrilla frugality.

This blog from Midway Simplicity was published a couple of years ago but nicely picks up on all these themes.

Here at the Financial Independence Hub, we often cite the definition of Financial Independence found at Wikipedia.

But the author of today’s linked blog also has a nice definition:

“Becoming financially independent means having enough money, so that it doesn’t become the main concern or worry in your life. It means having enough money to freely live your life on your own terms. It means that the paycheck doesn’t have control over you anymore and that you can experience life freely and openly.”

Hard to argue with that definition.

So how to you achieve it? The secret is simplicity itself:

“… You achieve financial independence when your income is significantly higher than your needs. 

To achieve that you have to either:

  1. Reduce your needs.

  2. …or increase your income.”

Two millennials well on the way to achieving early Financial Independence

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Saxon Funk and wife Hailey

They say one example is an aberration, but two is a trend. If so, this week’s posts here at the Hub and sister site Findependence Day indicate a growing pattern: the millennial generation is picking up on the “Findependence” meme and taking steps to establish early Financial Independence.

They don’t talk about classical “Retirement” decades hence but instead have set their sights on financial independence in their 30s. For both of them, real estate is an early ingredient. And both give credit to the book, Findependence Day, for being inspired to do this. (One of the central tenets of the book and new e-books is that the foundation of Financial Independence is a paid-for home.)

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Sean Cooper

Earlier this week, the Hub posted Sean Cooper’s blog on how he plans to be “findependent” by age 31.

And today, Friday, another millennial — Saxon Funk, pictured above — describes how he too plans to parlay frugal living and real estate into early Financial Independence. Saxon even noted that at 28, he is the same age as when Findependence Day protagonist Jamie began his 22-year journey to Financial Independence.

There must be many more millennials out there who have similar aspirations. We’d love to hear from you and join our community. Please come over to the Hub, register, and email us at jonathan@findependenceday.com to tell us your story. Hopefully, you can help to inspire your less financially literate peers.

The one-page guide to Findependence

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grs_titleConsidering that I once put an entire financial plan into a single tweet, it shouldn’t be too surprising that there exists a one-page guide to Financial Independence.

This one-page guide to Financial Independence is from J.D. Roth’s Get Rich Slowly site. (naturally, I would call it the one-page guide to Findependence!) Naturally, the strategy revolves around that most basic premise of personal finance: live below your means and spend less than you earn: much much less. So that you can save much much more. Not just the modest 10 to 20% that most people shoot for in their IRAs or RRSPs: Roth suggests saving at least 50% of your income, and preferably up to 70%.

Extreme? Indeed, Roth calls it Extreme Saving but that’s also the kind of savings levels that     Extreme Early Retirement gurus like Mr. Money Moustache and Jacob Lund Fisker advocate. The latter’s book can be found here.

As per the philosophy of this site, I would call this Extreme Early Findependence, not Extreme Early Retirement, which is why we call one of our soon-to-launch discussion forums Extreme Early Findependence.